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Accounting Policies of PSL Ltd. Company

Mar 31, 2015

These financial statements have been prepared on an accrual basis and under historical cost convention and in compliance. In all material aspects, with the applicable accounting principles in India, the applicable accounting standard notified under section 133 and the other relevant provisions of the Companies Act, 2013

All the assets and liabilities have been classified as current or non current as per the Company's normal operating cycle and other criteria set out in Schedule III of the Companies Act 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be less than twelve months.

A. Method of Accounting

The Accounts have been prepared to comply in all material aspects with applicable principles in India and the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act 2013

B. Valuation of Inventories

The Raw Materials, Stores and Spare Parts are valued at cost , which is arrived on FIFO basis. Work in progress, Semi Finished Goods and Finished Goods are valued at cost or at the net realisable value, whichever is lower. Cost of Inventories comprises of all costs of purchase (other than refundable duties and taxes), costs of conversion & other costs incurred in bringing the inventories to their present condition and location. Costs of Raw Materials, Packing Materials and Stores and Spares are determined by the average cost method. Cost of Work in Progress and Finished Goods inventories are determined by the absorption costing method. Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

C. Method of Depreciation and Amortisation

Depreciation is provided from the date the assets have been installed and put to use on written down value method at the rates and in the manner prescribed by schedule XIV of the Companies Act, 1956. Lease hold land is being amortised over the period of lease. Depreciation on additions to assets or on sale - discardment of assets , is calculated on pro-rata from the month of such addition or upto the month of such sale/discardment , as the case may be.

D. Research and Development

Revenue Expenditure is charged to Profit & Loss Account and Capital Expenditure is added to the cost of Fixed Assets in the year when it is incurred.

E. Revenue Recognition / Income

Revenue Income is recognised on accrual basis except where mentioned otherwise, in particular:

Sales revenue is recongnised when it is earned and no significant uncertainty exist as to its realisation or collection. Sales are net of sales return and trade discounts. Rebate, claims and discounts are accounted for as and when determined. Deductions made have been reduced from the Sales where found necessary.

Export sales are accounted on the basis of acceptance by the customers and on the basis of export bill of lading.

Export sales are accounted as per the prevailing exchange rate on the date of transaction.

Revenue from services is recongnised on rendering of services.

The pipe coating income is recognised after inspection, approval by customers and after dispatch. Interest Income is taken on accrual basis and it is netted off against Interest Payment during the year.

Dividend income on investments are accounted for when the right to receive the payment is established.

Expenditure is accounted for on accrual basis and provisions are made for all known liabilities.

F. Treatment of expenditure during construction period

Expenditure in the case of new units and substantial expansion of existing units during the construction period is included in the work in progress and the same is allotted to the respective Fixed Assets on the completion of the construction.

G. Fixed Assets

Fixed Assets are stated at cost of acquisition and installation. The cost includes Freight, Taxes and related incidental expenses less Modvat Credit.

The Company has erected factory building sheds and installed plant and machinery on lease hold land. The company had incurred some developmental expenditure which was earlier in CWIP on factory building, plant and on lease hold land which increase the future benefits from the existing assets beyond its previously assessed standard of performance i.e. increase in capacity, modernisation & up gradation.

H. Foreign Currency Translations

The Company is exposed to Currency Fluctuations on Foreign Currency transactions. With a view to minimize the volatility arising from fluctuations in the currency rates, the company follows established risk management policies including the use of exchange forward contracts and other derivative instruments.

Foreign currency transactions are recorded at the exchange rate prevailing on the date of such transactions. Monetary Assets and Liabilities in Foreign Currency as at the Balance Sheet. Gains and losses arising on account of difference in foreign exchange rates on settlement / translation of Monetary Assets and Liabilities are recognized in the Profit and Loss Account.

In respect of forward contracts assigned to the Foreign Currency assets as at the balance sheet date, the proportionate premium / discount for the period up to the date of balance sheet is recognized in the profit and loss account. The exchange difference measured by the change rate between the inception of forward contract and date of balance sheet is applied on foreign currency amount of the forward contract and is recognized in the profit and loss account.

All loans and deferred credits repayable in foreign currency and outstanding at the close of the year are expressed in Indian currency at the appropriate rate of exchange prevailing on the date of Balance Sheet.

Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year.

I. Investments

Investments are classified into current and Long-term investments. Current Investments are stated at lower of cost and fair value. Long-term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of Long-term investments. However, fixed income long term securities are stated at cost, less amortization of premium/ discount and provision for diminution to recognize a decline other then temporary.

J. Employee Benefits

Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognised in the period in which the employee renders the related service. The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.

Post-employment benefits:

a. Defined contribution plans

Defined contribution plans are Provident Fund scheme, employee state insurance scheme and Government administered Pension Fund scheme for all employees and superannuation scheme for eligible employees. The Company's contribution to defined contribution plans is recognized in the Profit and Loss Account in the financial year to which they relate.

The Company makes specified monthly contributions towards employee provident fund to the respective Regional Provident Fund Authority.

b. Defined Benefit Gratuity Plan

The company operates a defined benefit Gratuity Plan for employees. The Company contributes the same to LIC towards meeting the Gratuity obligations

c. Other long term employee benefits

Entitlements to annual leave and sick leave are recongnised when they accrue to employees. Sick leave can only be availed while annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulations of leave. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit method with actuarial valuations being carried out at each Balance Sheet date.

K. Cash Flow Statement

The Cash Flow statement is prepared by the indirect method set out in Accounting Standard -3 on Cash Flow Statement and presents Cash Flows by operating investing and financing activities of the Company. Cash and cash equivalent presented in the Cash Flow Statement consists of Cash in Hand and demand deposits with banks as on the Balance sheet date.

L. Borrowing Cost

Interest & other borrowing costs on specific borrowings relatable to the qualifying assets are capitalised. Other interests and borrowing costs are charged to Revenue.

M. Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when there is a present obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligations and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined based on the best estimate required to settle the obligation at the year end date. These are reviewed at each year end date and adjusted to reflect the best current estimate.

Contingent liabilities are not recognized but disclosed in financial statements. Contingent assets are neither recognized nor disclosed in the financial statements.

N. Management Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and the differences between actual results and estimates are recognised in the periods in which the results are known / materialize.

O. Excise Duty /Service Tax and Sales Tax/Value Added Taxes

Excise duty/Service tax is accounted on the basis of both, payments made in respect of goods cleared/services provided as also provision made for goods lying in bonded warehouses. Sales tax/Value added tax paid is charged to Profit and Loss account.

P. Accounting for Taxes on Income

Income Taxes are accounted for in accordance with Accounting Standard 22 on Accounting for taxes on income. Income taxes comprise both current and deferred tax.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws. The company offsets advance payments and provisions for current tax and discloses the net amount it intends to settle and where it has a legally enforceable right to set off the recognised amount.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax assets or a deferred tax liability. Deferred tax assets and liabilities are recognized for future tax consequences attributable to timing differences. They are measured using the substantively enacted tax rates and tax regulations.

The carrying amount of deferred tax assets at each balance sheet date is reduced to the extent that it is no longer reasonable certain that sufficient future taxable income will be available against which the deferred tax assets can be realized.

Q. Impairment of Assets:

In the opinion of the company's Management, there is no impairment to the assets to which Accounting Standard 28 - "Impairment of Assets" applied requiring any revenue recognition


Mar 31, 2014

These financial statements have been prepared on an accrual basis and under historical cost convention and in compliance. In all material aspects, with the applicable accounting principles in India, the applicable accounting standard notified under Section 211 (3C) and the other relevant provisions of the Companies Act, 1956.

All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule VI of the Companies Act 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be less than 12 months.

A. Method of Accounting

The Accounts have been prepared to comply in all material aspects with applicable principles in India and the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

B. Valuation of Inventories

The Raw Materials, Stores and Spare Parts are valued at cost, which is arrived on FIFO basis. Work in progress, Semi Finished Goods and Finished Goods are valued at cost or at the net realisable value, whichever is lower. Cost of Inventories comprises of all costs of purchase (other than refundable duties and taxes), costs of conversion & other costs incurred in bringing the inventories to their present condition and location. Costs of Raw Materials, Packing Materials and Stores and Spares are determined by the average cost method. Cost of Work in Progress and Finished Goods inventories are determined by the absorption costing method. Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

C. Method of Depreciation and Amortisation

Depreciation is provided from the date the assets have been installed and put to use on written down value method at the rates and in the manner prescribed by Schedule XIV of the Companies Act, 1956. Lease hold land is being amortised over the period of lease. Depreciation on additions to assets or on sale - discardment of assets, is calculated on pro-rata from the month of such addition or upto the month of such sale/discardment, as the case may be.

D. Research and Development

Revenue Expenditure is charged to Profit & Loss Account and Capital Expenditure is added to the cost of Fixed Assets in the year when it is incurred.

E. Revenue Recognition / Income

Revenue Income is recognised on accrual basis except where mentioned otherwise, in particular:

Sales revenue is recognised when it is earned and no significant uncertainty exist as to its realisation or collection. Sales are net of sales return and trade discounts. Rebate, claims and discounts are accounted for as and when determined. Deductions made have been reduced from the Sales where found necessary.

Export sales are accounted on the basis of acceptance by the customers and on the basis of export bill of lading.

Export sales are accounted as per the prevailing exchange rate on the date of transaction.

Revenue from services is recognised on rendering of services.

The pipe coating income is recognised after inspection, approval by customers and after despatch. Interest Income is taken on accrual basis and it is netted off against Interest Payment during the year.

Dividend income on investments are accounted for when the right to receive the payment is established.

Expenditure is accounted for on accrual basis and provisions are made for all known liabilities.

F. Treatment of expenditure during construction period

Expenditure in the case of new units and substantial expansion of existing units during the construction period is included in the work in progress and the same is allotted to the respective Fixed Assets on the completion of the construction.

G. Fixed Assets

Fixed Assets are stated at cost of acquisition and installation. The cost includes Freight, Taxes and related incidental expenses less Modvat Credit.

The Company has erected factory building sheds and installed plant and machinery on lease hold land. The Company had incurred some developmental expenditure which was earlier in CWIP on factory building, plant and on lease hold land which increase the future benefits from the existing assets beyond its previously assessed standard of performance i.e. increase in capacity, modernisation & up gradation.

H. Foreign Currency Transactions

The Company is exposed to Currency Fluctuations on Foreign Currency transactions. With a view to minimize the volatility arising from fluctuations in the Currency Rates, the Company follows established risk management policies including the use of exchange forward contracts and other derivative instruments.

Foreign currency transactions are recorded at the exchange rate prevailing on the date of such transactions. Monetary Assets and Liabilities in Foreign Currency as at the Balance Sheet. Gains and losses arising on account of difference in foreign exchange rates on settlement / translation of Monetary Assets and Liabilities are recognized in the Profit and Loss Account.

In respect of forward contracts assigned to the Foreign Currency assets as at the balance sheet date, the proportionate premium / discount for the period up to the date of balance sheet is recognized in the profit and loss account. The exchange difference measured by the change rate between the inception of forward contract and date of balance sheet is applied on foreign currency amount of the forward contract and is recognized in the profit and loss account.

All loans and deferred credits repayable in foreign currency and outstanding at the close of the year are expressed in Indian currency at the appropriate rate of exchange prevailing on the date of Balance Sheet.

Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year.

I. Investments

Investments are classified into current and Long-term investments. Current Investments are stated at lower of cost and fair value. Long-term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of Long-term investments. However, fixed income long term securities are stated at cost, less amortization of premium/discount and provision for diminution to recognize a decline other then temporary.

J Employee Benefits

Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognised in the period in which the employee renders the related service. The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.

Post-employment benefits:

a. Defined contribution plans

Defined contribution plans are Provident Fund scheme, employee state insurance scheme and Government administered Pension Fund scheme for all employees and superannuation scheme for eligible employees. The Company''s contribution to defined contribution plans is recognized in the Profit and Loss Account in the financial year to which they relate.

The Company makes specified monthly contributions towards employee provident fund to the respective Regional Provident Fund Authority.

b. Defined Benefit Gratuity Plan

The Company operates a defined benefit Gratuity Plan for employees. The Company contributes the same to LIC towards meeting the Gratuity obligations.

c. Other long term employee benefits

Entitlements to annual leave and sick leave are recognised when they accrue to employees. Sick leave can only be availed while annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulations of leave. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit method with actuarial valuations being carried out at each Balance Sheet date.

K. Cash Flow Statement

The Cash Flow statement is prepared by the indirect method set out in Accounting Standard-3 on Cash Flow Statement and presents Cash Flows by operating investing and financing activities of the Company. Cash and cash equivalent presented in the Cash Flow Statement consists of Cash in Hand and demand deposits with banks as on the Balance sheet date.

L. Borrowing Cost

Interest & other borrowing costs on specific borrowings relatable to the qualifying assets are capitalised. Other interests and borrowing costs are charged to Revenue.

M. Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when there is a present obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligations and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined based on the best estimate required to settle the obligation at the year end date. These are reviewed at each year end date and adjusted to reflect the best current estimate.

Contingent liabilities are not recognized but disclosed in financial statements. Contingent assets are neither recognized nor disclosed in the financial statements.

N. Management Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and the differences between actual results and estimates are recognised in the periods in which the results are known / materialize.

O. Excise Duty /Service Tax and Sales Tax/Value Added Taxes

Excise duty/Service tax is accounted on the basis of both, payments made in respect of goods cleared/services provided as also provision made for goods lying in bonded warehouses. Sales tax/Value added tax paid is charged to Profit and Loss account.

P. Accounting for Taxes on Income

Income Taxes are accounted for in accordance with Accounting Standard 22 on Accounting for taxes on income. Income taxes comprise both current and deferred tax.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws. The Company offsets advance payments and provisions for current tax and discloses the net amount it intends to settle and where it has a legally enforceable right to set off the recognised amount.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax assets or a deferred tax liability. Deferred tax assets and liabilities are recognized for future tax consequences attributable to timing differences. They are measured using the substantively enacted tax rates and tax regulations.

The carrying amount of deferred tax assets at each balance sheet date is reduced to the extent that it is no longer reasonable certain that sufficient future taxable income will be available against which the deferred tax assets can be realized.

Q. Impairment of Assets

In the opinion of the Company''s Management, there is no impairment to the assets to which Accounting Standard 28 - "Impairment of Assets" applied requiring any revenue recognition.


Sep 30, 2013

Statement of Significant Accounting Policies and Practices (Annexed) to and forming part of the Financial Statements for the period ended 30th September 2013)

These Financial Statements have been prepared on an accrual basis and under historical cost convention and in compliance in all material aspects, with the applicable accounting principles in India, the applicable accounting standard notified under Section 211 (3C) and the other relevant provisions of the Companies Act, 1956

All the Assets and Liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule VI of the Companies Act 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be less than 12 months.

A. Method of Accounting

The Accounts have been prepared to comply in all material aspects with applicable principles in India and the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act 1956

B. Valuation of Inventories

The Raw Materials, Stores and Spare Parts are valued at cost, which is arrived on FIFO basis. Work in progress, Semi Finished Goods and Finished Goods are valued at cost or at the net realisable value, whichever is lower. Cost of Inventories comprises of all costs of purchase (other than refundable duties and taxes), costs of conversion & other costs incurred in bringing the inventories to their present condition and location. Costs of Raw Materials, Packing Materials and Stores and Spares are determined by the average cost method. Cost of Work in Progress and Finished Goods inventories are determined by the absorption costing method. Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

C. Method of Depreciation and Amortisation

Depreciation is provided from the date the assets have been installed and put to use on written down value method at the rates and in the manner prescribed by schedule XIV of the Companies Act, 1956. Lease hold land is being amortised over the period of lease. Depreciation on additions to assets or on sale - discardment of assets, is calculated on pro-rata from the month of such addition or upto the month of such sale/discardment, as the case may be.

D. Research and Development

Revenue Expenditure is charged to Profit & Loss Account and Capital Expenditure is added to the cost of Fixed Assets in the year when it is incurred.

E. Revenue Recognition / Income

Revenue Income is recognised on accrual basis except where mentioned otherwise, in particular:

Sales revenue is recognised when it is earned and no significant uncertainty exist as to its realisation or collection. Sales are net of sales return and trade discounts. Rebate, claims and discounts are accounted for as and when determined. Deductions made have been reduced from the Sales where found necessary.

Export Sales are accounted on the basis of acceptance by the customers and on the basis of export bill of lading.

Export Sales are accounted as per the prevailing exchange rate on the date of transaction.

Revenue from services is recognised on rendering of services.

The pipe coating income is recognised after inspection, approval by customers and after despatch. Interest Income is taken on accrual basis and it is netted off against Interest Payment during the year.

Dividend Income on investments are accounted for when the right to receive the payment is established.

Expenditure is accounted for on accrual basis and provisions are made for all known liabilities.

F. Treatment of expenditure during construction period

Expenditure in the case of new units and substantial expansion of existing units during the construction period is included in the work in progress and the same is allotted to the respective Fixed Assets on the completion of the construction.

G. Fixed Assets

Fixed Assets are stated at cost of acquisition and installation. The cost includes Freight, Taxes and related incidental expenses less Modvat Credit.

The Company has erected factory building sheds and installed plant and machinery on lease hold land. The company had incurred some developmental expenditure which was earlier in CWIP on factory building, plant and on lease hold land which increase the future benefits from the existing assets beyond its previously assessed standard of performance i.e. increase in capacity, modernisation & up gradation.

H. Foreign Currency or Transactions

The Company is exposed to Currency Fluctuations on Foreign Currency transactions. With a view to minimize the volatility arising from fluctuations in the currency rates, the company follows established risk management policies including the use of exchange forward contracts and other derivative instruments.

Foreign currency transactions are recorded at the exchange rate prevailing on the date of such transactions. Monetary Assets and Liabilities in Foreign Currency as at the Balance Sheet. Gains and losses arising on account of difference in foreign exchange rates on settlement / translation of Monetary Assets and Liabilities are recognized in the Profit and Loss Account.

In respect of forward contracts assigned to the Foreign Currency assets as at the balance sheet date, the proportionate premium / discount for the period up to the date of Balance Sheet is recognized in the Profit and Loss Account. The exchange difference measured by the change rate between the inception of forward contract and date of balance sheet is applied on foreign currency amount of the forward contract and is recognized in the Profit and Loss Account.

All loans and deferred credits repayable in foreign currency and outstanding at the close of the year are expressed in Indian currency at the appropriate rate of exchange prevailing on the date of Balance Sheet.

Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year.

I. Investments

Investments are classified into Current and Long-term investments. Current Investments are stated at lower of cost and fair value. Long-term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of Long-term investments. However, fixed income long term securities are stated at cost, less amortization of premium/discount and provision for diminution to recognize a decline other then temporary.

J. Employee Benefits

Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognised in the period in which the employee renders the related service. The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.

Post-employment benefits:

a. Defined contribution plans

Defined contribution plans are Provident Fund scheme, employee state insurance scheme and Government administered Pension Fund scheme for all employees and superannuation scheme for eligible employees. The Company''s contribution to defined contribution plans is recognized in the Profit and Loss Account in the financial year to which they relate.

The Company makes specified monthly contributions towards employee provident fund to the respective Regional Provident Fund Authority.

b. Defined Benefit Gratuity Plan

The company operates a Defined Benefit Gratuity Plan for employees. The Company contributes the same to LIC towards meeting the Gratuity obligations

c. Other long term employee benefits

Entitlements to annual leave and sick leave are recongnised when they accrue to employees. Sick leave can only be availed while annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulations of leave. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit method with actuarial valuations being carried out at each Balance Sheet date.

K. Cash Flow Statement

The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard -3 on Cash Flow Statement and presents Cash Flows by operating investing and financing activities of the Company. Cash and cash equivalent presented in the Cash Flow Statement consists of Cash in Hand and demand deposits with banks as on the Balance sheet date.

L. Borrowing Cost

Interest & other borrowing costs on specific borrowings relatable to the qualifying assets are capitalised. Other interests and borrowing costs are charged to Revenue.

M. Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when there is a present obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligations and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined based on the best estimate required to settle the obligation at the year end date. These are reviewed at each year end date and adjusted to reflect the best current estimate.

Contingent liabilities are not recognized but disclosed in financial statements. Contingent assets are neither recognized nor disclosed in the financial statements.

N. Management Estimates

The preparation of Financial Statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of Assets and Liabilities and disclosure of contingent liabilities on the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and the differences between actual results and estimates are recognised in the periods in which the results are known / materialize.

O. Excise Duty /Service Tax and Sales Tax/Value Added Taxes

Excise Duty/Service Tax is accounted on the basis of both, payments made in respect of goods cleared/services provided as also provision made for goods lying in bonded warehouses. Sales Tax/Value Added Tax paid is charged to Profit and Loss Account.

P. Accounting for Taxes on Income

Income Taxes are accounted for in accordance with Accounting Standard 22 on Accounting for taxes on income. Income taxes comprise both current and deferred tax.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws. The company offsets advance payments and provisions for current tax and discloses the net amount it intends to settle and where it has a legally enforceable right to set off the recognised amount.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a Deferred Tax Assets or a Deferred Tax Liability. Deferred Tax Assets and liabilities are recognized for future tax consequences attributable to timing differences. They are measured using the substantively enacted tax rates and tax regulations.

The carrying amount of Deferred Tax Assets at each Balance Sheet date is reduced to the extent that it is no longer reasonable certain that sufficient future taxable income will be available against which the deferred tax assets can be realized.

Q. Impairment of Assets:

In the opinion of the company''s Management, there is no impairment to the assets to which Accounting Standard 28 - "Impairment of Assets" applied requiring any revenue recognition

During this period the Company has sought Restructuring package from all the Bankers towards the Bank Loan Outstanding. The Company has filed the Flash Report on 6th March 2013 before Corporate Debt Restructuring (CDR) Cell at Mumbai. The restructuring package was approved by the CDR cell with an effective date being 24.08.2013. The outstanding loan balance is worked out on the basis of the approved package and it is accounted. The interest rate was calculated @ 10.25% on the loan outstanding balance of non CDR member bankers as on 1st January 2013 and accounted the excess interest charged by the non CDR member banks during the period from 1st January 2013 to 30th September 2013 was adjusted accordingly in the interest account. Interest payable for CDR member banks were not accounted for the period from 1st January 2013 to 30th September 2013. The Master Restructuring Agreement (MRA) drafted by Amarachand & Mangaldas & Suresh A Shroff & Co. (AMSS) (Legal Counsel to the Bankers) appointed by the Banks through MI is under signature as on the date of Balance sheet.


Mar 31, 2012

These Financial Statements have been prepared on an Accrual Basis and under historical cost convention and in compliance. In all material aspects, with the applicable accounting principles in India, the applicable accounting standard notified under Section 211 (3C) and the other relevant provisions of the Companies Act, 1956.

All the Assets and Liabilities have been classified as current or non current as per the Company's normal operating cycle and other criteria set out in Schedule VI of the Companies Act, 1956. Based on the nature of products and the time between the acquisition of Assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be less than 12 months.

A. Method of Accounting

The Accounts have been prepared to comply in all material aspects with applicable principles in India and the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

B. Valuation of Inventories

The Raw Materials, Stores and Spare Parts are valued at cost, which is arrived on FIFO basis. Work in progress, Semi Finished Goods and Finished Goods are valued at cost or at the net realizable value, whichever is lower. Cost of Inventories comprises of all costs of purchase (other than refundable duties and taxes), costs of conversion & other costs incurred in bringing the inventories to their present condition and location. Costs of Raw Materials, Packing Materials and Stores and Spares are determined by the average cost method. Cost of Work in Progress and Finished Goods inventories are determined by the absorption costing method. Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

C. Method of Depreciation and Amortization

Depreciation is provided from the date the Assets have been installed and put to use on written down value method at the rates and in the manner prescribed by schedule XIV of the Companies Act, 1956. Lease hold land is being amortized over the period of lease. Depreciation on additions to Assets or on sale - discernment of Assets, is calculated on pro-rata basis from the month of such addition or up to the month of such sale/discernment, as the case may be.

D. Research and Development

Revenue Expenditure is charged to Profit & Loss Account and Capital Expenditure is added to the cost of Fixed Assets in the year when it is incurred.

E. Revenue Recognition / Income

Revenue Income is recognized on Accrual Basis except where mentioned otherwise, in particular:

Sales revenue is recognized when it is earned and no significant uncertainty exist as to its realization or collection. Sales are net of sales return and trade discounts. Rebate, claims and discounts are accounted for as and when determined. Deductions made have been reduced from the Sales where found necessary.

Export Sales are accounted on the basis of acceptance by the customers and on the basis of export bill of lading.

Export Sales are accounted as per the prevailing exchange rate on the date of transaction.

Revenue from services is recognized on rendering of services.

The pipe coating income is recognized after inspection, approval by customers and after dispatch. Interest Income is taken on Accrual Basis and it is netted off against Interest Payment during the year.

Dividend income on investments are accounted for when the right to receive the payment is established.

Expenditure is accounted for on Accrual Basis and provisions are made for all known liabilities.

F. Treatment of expenditure during construction period

Expenditure in the case of new units and substantial expansion of existing units during the construction period is included in the work-in-progress and the same is allotted to the respective Fixed Assets on the completion of the construction.

G. Fixed Assets

Fixed Assets are stated at cost of acquisition and installation. The cost includes Freight, Taxes and related incidental expenses less Cenvat Credit.

The Company has erected Factory Building Sheds and installed Plant and Machinery on lease hold land. The company had incurred some developmental expenditure which was earlier in CWIP on factory building, plant and on lease hold land which increase the future benefits from the existing Assets beyond its previously assessed standard of performance i.e. increase in capacity, modernization & up gradation.

H. Foreign Currency Transactions

The Company is exposed to Currency Fluctuations on Foreign Currency transactions. With a view to minimize the volatility arising from fluctuations in the currency rates, the company follows established risk management policies including the use of exchange forward contracts and other derivative instruments.

Foreign currency transactions are recorded at the exchange rate prevailing on the date of such transactions. Monetary Assets and Liabilities in Foreign Currency as at the Balance Sheet, Gains and losses arising on account of difference in foreign exchange rates on settlement / transaction of Monetary Assets and Liabilities are recognized in the Profit and Loss Account.

In respect of forward contracts assigned to the Foreign Currency Assets as at the Balance Sheet date, the proportionate premium / discount for the period up to the date of Balance Sheet is recognized in the Profit and Loss account. The exchange difference measured by the change rate between the inception of forward contract and date of Balance Sheet is applied on Foreign Currency amount of the forward contract and is recognized in the Profit and Loss account.

All loans and deferred credits repayable in Foreign Currency and outstanding at the close of the year are expressed in Indian currency at the appropriate rate of exchange prevailing on the date of Balance Sheet.

Balances in the form of Current Assets and Current Liabilities in Foreign Currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year.

I. Investments

Investments are classified into Current and Long-term Investments. Current Investments are stated at lower of cost and fair value. Long-term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of Long-term investments. However, fixed income long term securities are stated at cost, less amortization of premium/discount and provision for diminution to recognize a decline other than temporary.

J. Employee Benefits

Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as Short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of Short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.

Post-employment benefits:

a. Defined contribution plans

Defined contribution plans are Provident Fund Scheme, Employee State Insurance Scheme and Government Administered Pension Fund Scheme for all employees and Superannuation Scheme for eligible employees. The Company's contribution to defined contribution plans are recognized in the Profit and Loss Account in the financial year to which they relate.

The Company makes specified monthly contributions towards Employee Provident Fund to the respective Regional Provident Fund Authority.

b. Defined Benefit Gratuity Plan

The Company operates a Defined Benefit Gratuity Plan for employees. The Company contributes the same to LIC towards meeting the Gratuity obligations

c. Other Long term employee benefits

Entitlements to annual leave and sick leave are recognized when they accrue to employees. Sick leave can only be availed while annual leave can either be availed or encased subject to a restriction on the maximum number of accumulations of leave. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit method with actuarial valuations being carried out at each Balance Sheet date.

K. Cash Flow Statement

The Cash Flow Statement is prepared by the indirect method set out in Accounting Standard -3 on Cash Flow Statement and present Cash Flows by operating investing and financing activities of the Company. Cash and cash equivalent presented in the Cash Flow Statement consists of Cash in Hand and demand deposits with banks as on the Balance Sheet date.

L. Borrowing Cost

Interest & other borrowing costs on specific borrowings relatable to the qualifying Assets are capitalized. Other interests and borrowing costs are charged to Revenue.

M. Provisions, Contingent Liabilities and Contingent Assets

A provision is recognized when there is a present obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligations and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined based on the best estimate required to settle the obligation at the yearend date. These are reviewed at the end of each year and adjusted to reflect the best current estimate.

Contingent Liabilities are not recognized but disclosed in Financial Statements. Contingent Assets are neither recognized nor disclosed in the Financial Statements.

N. Management Estimates

The preparation of Financial Statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of Assets and Liabilities and disclosure of Contingent Liabilities on the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and the differences between actual results and estimates are recognised in the periods in which the results are known / materialize.

O. Excise Duty /Service Tax and Sales Tax/Value Added Taxes

Excise duty/Service tax is accounted on the basis of both, payments made in respect of goods cleared/services provided as also provision made for goods lying in bonded warehouses. Sales Tax/Value Added Tax paid is charged to Profit and Loss account.

P. Accounting for Taxes on Income

Income Tax are accounted for in accordance with Accounting Standard 22 on Accounting for taxes on income. Income taxes comprise both Current and Deferred tax.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws. The company offsets advance payments and provisions for current tax and discloses the net amount it intends to settle and where it has a legally enforceable right to set off the recognized amount.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a Deferred Tax Assets or a Deferred Tax Liability. Deferred Tax Assets and Liabilities are recognized for future tax consequences attributable to timing differences. They are measured using the substantively enacted tax rates and tax regulations.

The carrying amount of Deferred Tax Assets at each Balance Sheet date is reduced to the extent that it is no longer reasonable certain that sufficient future taxable income will be available against which the Deferred Tax Assets can be realized.

Q. Impairment of Assets:

In the opinion of the Company's Management, there is no impairment to the Assets to which Accounting Standard 28 - "Impairment of Assets" applied requiring any revenue recognition.


Mar 31, 2011

A. Method of Accounting

The Accounts have been prepared to comply in all material aspects with applicable principles in India and the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act,1956

b. Inventories

The Raw Materials, Stores and Spare Parts are valued at cost, which is arrived on FIFO basis. Work in progress, Semi Finished Goods and Finished Goods are valued at cost or at the net realisable value, whichever is lower. Cost of Inventories comprises of all costs of purchase (other than refundable duties and taxes) costs of conversion & other costs incurred in bringing the inventories to their present condition and location. Costs of Raw Materials, Packing Materials and Stores and Spares are determined by the average cost method. Cost of Work in Progress and Finished Goods Inventories are determined by the absorption costing method. Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

c. Depreciation

Depreciation is provided from the date the assets have been installed and put to use on written down value method at the rates and in the manner prescribed by Shedule XIV of the Companies Act, 1956. Lease hold land is being amortised over the period of lease. Depreciation on additions to assets or on sale - discardment of assets, is calculated on pro-rata basis from the month of such addition or upto the month of such sale/discardment, as the case may be.

d. Research and Development Expenditure

Revenue Expenditure is charged to Profit & Loss Account and Capital Expenditure is added to the cost of Fixed Assets in the year when it is incurred.

e. Revenue Recognition/Income

Revenue Income is recognised on accrual basis except where mentioned otherwise, in particular:

i. Sales Revenue is recongnised when it is earned and no significant uncertainty exist as to its realisation or collection. Sales are net of sales return and trade discounts. Rebate, claims and discounts are accounted for as and when determined. Deductions made have been reduced from the Sales where found necessary. Export sales are accounted on the basis of acceptance by the customers and on the basis of export bill of lading. Export sales are accounted as per the prevailing exchange rate on the date of transaction. Revenue from services is recongnised on rendering of services.

ii. Gross Sales include Excise Duty collection of Rs. 13946.47 lacs, Service Tax, Sales Tax and Freight charged in invoices.

iii. The pipe coating income is recognised after inspection, approval by customers and after despatch.

iv. Interest income is taken on accrual basis. Interest Income of Rs. 759.08 Lacs netted off against interest payment during the year. (Previous year interest income of Rs. 477.88 lacs netted off against interest payment) wherever applicable.

v. Dividend income on investments are accounted for when the right to receive the payment is established.

vi. Expenditure are accounted for on accrual basis and provisions are made for all known liabilities.

f. Treatment of expenditure during construction period

Expenditure in the case of new units and substantial expansion of existing units during the construction period is included in the work in progress and the same is allotted to the respective Fixed Assets on the completion of the construction.

g. Fixed Assets

i. Fixed Assets are stated at cost of acquisition and installation. The cost includes Freight, Taxes and related incidental expenses less Cenvat Credit.

ii. The Company has erected factory building sheds and installed plant and machinery on lease hold land. The Company had incurred some developmental expenditure which was earlier in CWIP on factory building, plant and on lease hold land which increase the future benefits from the existing assets beyond its previously assessed standard of performance i.e. increase in capacity, modernisation & upgradation.

h. Foreign Currency Transactions

i. a. The company is exposed to currency Fluctuations on Foreign Currency transactions. With a view to minimize the volatility arising from fluctuations in the currency rates, the company follows established risk management policies including the use of exchange forward contracts and other derivative instruments.

b. Foreign currency transactions are recorded at the exchange rate prevailing on the date of such transactions. Monetary Assets and Liabilities in Foreign Currency as at the Balance Sheet. Gains and losses arising on account of difference in foreign exchange rates on settlement / translation of monetary Assets and Liabilities are recognized in the Profit and Loss Account.

c. In respect of forward contracts assigned to the Foreign Currency Assets as at the Balance Sheet date, the proportionate premium / discount for the period up to the date of Balance Sheet is recognized in the Profit and Loss Account. The exchange difference measured by the change rate between the inception of forward contract and date of Balance Sheet is applied on foreign Currency amount of the forward contract and is recognized in the Profit and Loss Account.

ii. All loans and deferred credits repayable in foreign currency and outstanding at the close of the year are expressed in Indian currency at the appropriate rate of exchange prevailing on the date of Balance Sheet.

iii. Balances in the form of Current Assets and Current Liabilities in Foreign Currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year.

i. Derivative Instruments

I. The company has entered into the following derivative instruments:

a. Forward Exchange contracts (being a derivative instrument), which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables. Forward Exchange Contracts entered into by the Company as on March 31, 2011 [8.861 USD (mn)]

b. Interest Rate Swaps to hedge against fluctuations in interest rate changes : No. of Contracts : NIL

Notional Principal : NIL

c. Currency Swaps (other than forward exchange contracts stated above) to hedge against fluctuations in changes in exchange rate.

No. of Contracts : NIL

Notional Principal : NIL

III. Derivative Instruments (causing an unhedged Foreign Currency exposure): NIL

j. Investments

i. Investments are of long term nature and are stated at cost of acquisition, less any diminishing in the value other then temporary.

ii. The investments in companies under the same management and its subsidiaries whose shares are unquoted are valued at cost. The Management is of the opinion that there is no diminishing value on these Investments.

k. Employee Benefits

A. Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognised in the period in which the employee renders the related service. The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.

B. Post-employment benefits

(a) Defined contribution plans

Defined contribution plans are Provident Fund Scheme, Employee State Insurance Scheme and Government Administered Pension Fund Scheme for all employees and Superannuation Scheme for eligible employees. The Company's contribution to defined contribution plans are recognised in the Profit and Loss Account in the financial year to which they relate.

The Company makes specified monthly contributions towards Employee Provident Fund to the respective Regional Provident Fund Authority.

b) Defined Benefit Gratuity Plan

The Company operates a defined benefit Gratuity Plan for employees. The Company contributes the same to LIC towards meeting the Gratuity obligations.

C. Other long term employee benefits

Entitlements to annual leave and sick leave are recognised when they accrue to employees. Sick leave can only be availed while annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulation of leave. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit method with actuarial valuations being carried out at each Balance Sheet date.

iii) For the year ended March 31, 2011, provision for Employees Benefits amounting to Rs. 53.56 Lacs towards Leave Encashment has been made to SBI Life Insurance Co. Ltd., Mumbai. The actual liability as per actuarial valuation amounts to Rs. 135.60 Lacs.

l. Borrowing Cost

Interest & other Borrowing Costs on specific borrowings relatable to the qualifying Assets are capitalised. Other Interests and Borrowing Costs are charged to Revenue.

m. Cash Flow Statement

The Cash Flow statement is prepared by the indirect method set out in Accounting Standard - 3 on Cash Flow Statement and presents Cash Flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented in the Cash Flow Statement consists of Cash in Hand and demand deposits with banks as on the Balance Sheet date.

n. Provisions

A provision is recognised when there is a present obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligations and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined based on the best estimate required to settle the obligation at the year end date. These are reviewed at each year end date and adjusted to reflect the best current estimate.

o. Segment Reporting

The Group is engaged in the business of production of steel products which in the opinion of the management is considered the only business segment in the context of Accounting Standard - 17 on Segmental Reporting. Also, the Group does not consider any significant difference as regards the risks and returns of the product with reference to export and domestic sales. Therefore, Segment information as required by Accounting Standard - 17 is not applicable.

p. Related Party and Key Management Personnel Disclosure

A. Name of the Party and the Relationship

a) Subsidiary Companies

i. PSL Corrosion Control Services Ltd. : 100% Subsidiary Company

ii. Pipeline Systems Ltd., Mauritius : 100% Subsidiary Company

iii. PSL USA INC., Delaware, USA : 100% Subsidiary Company

iv. PSL Gas Distribution Pvt.Ltd. : 100% Subsidiary Company

v. PSL Infrastructure & Ports Pvt.Ltd. : 100% Subsidiary Company

vi. PSL FZE, Sharjah. : 100% Subsidiary Company of Pipeline Systems Ltd., Mauritius

vii. PSL North America LLC. : JV Company of PSL USA INC, Delaware, USA, (78% holding)

b) Companies in which control exists directly / indirectly

i. BHI Ltd.

ii. Broken Hills International Ltd.

iii. Eurocoustic Products Ltd.

iv. Punj International Pvt. Ltd.

v. Punj Investments Ltd.

vi. Punj Corporation Private Limited

vii. Rosoboronterra India Pvt.Ltd.

(Subsidiary of Punj Corporation Pvt.Ltd.)

c) Key Management Personnel

Ashok Punj :Managing Director

M. M. Mathur :Director

R. K. Bahri :Director

G. S. Sauhta :Director

D. N. Sehgal :Director

S.P. Bhatia :Director

C. K. Goel :Director

G. Gehani :Director & Company Secretary

q. Lease

Operating lease payments are recognized as expenditure in the Profit and Loss Account on a straight-line basis, which is representative of the time pattern of benefits received from the use of assets taken on lease. Lease rentals in respect of operating lease are recognized as income over the lease period.

r. Earning Per Share

The Company reports basic and diluted Earnings Per Share in accordance with Accounting Standard 20 on Earning Per Share. Basic Earnings per share is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year. Diluted Earnings Per Share is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.

s. Management Estimates

The preparation of Financial Statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of Assets and Liabilities and disclosure of Contingent Liabilities on the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and the differences between actual results and estimates are recognised in the periods in which the results are known / materialize.

t. Accounting for Taxes on Income

Income Tax are accounted for in accordance with Accounting Standard 22 on Accounting for taxes on income. Income tax comprise both current and deferred tax.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable Tax Rates and laws. The company offsets advance payments and provisions for current tax and disclose the net amount it intends to settle and where it has a legally enforceable right to set off the recognised amount.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a Deferred Tax Assets or a Deferred Tax Liability. Deferred Tax Assets and Liabilities are recognized for future tax consequences attributable to timing differences. They are measured using the substantively enacted tax rates and tax regulations.

The carrying amount of Deferred Tax Assets at each Balance Sheet date is reduced to the extent that it is no longer reasonable certain that sufficient future taxable income will be available against which the Deferred Tax Assets can be realized.

u. Sundry Debtors/Loans & Advances

Sundry Debtors, Creditors and other advances are subject to confirmation. The effect of the same, if any, which is not likely to be material, will be adjusted at the time of confirmation. Sundry Creditors for purchases includes Rs. 89707.07 Lacs being buyer's credit availed by the Company for the purchase of Raw Materials/ Capital Goods.

v. Impairment of Assets:

In the opinion of the company's Management, there is no impairment to the assets to which Accounting Standard 28 "Impairment of Assets" applied requiring any revenue recognition.

w. Contingent liabilities

Contingent liabilities as defined in Accounting Standard 29 are disclosed in the notes to accounts. Provisions is made if it became probable that an outflow of future economic benefits will be required for an item previously dealt with it as a contingent liability.


Mar 31, 2010

A. Method of Accounting

The Accounts have been prepared to comply in all material aspects with applicable principles in India and the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

b. Inventories

The Raw Materials, Stores and Spare Parts are valued at a cost, which is arrived on FIFO basis. Work in progress, Semi Finished Goods and Finished Goods are valued at cost or at the net realisable value,whichever is lower. Cost of Inventories comprises of all costs of purchase (other than refundable duties and taxes), costs of conversion & other costs incurred in bringing the inventories to their present condition and locations. Costs of Raw Materials, Packing Materials and Stores and Spares are determined by the average method. Cost of Work in Process and Finished Goods Inventories are determined by the absorption costing method. Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

c. Depreciation

Depreciation is provided from the date the assets have been installed and put to use on written down value method at the rates and in the manner prescribed by schedule XIV of the Companies Act, 1956. Lease hold land is being amortised over the period of lease. Depreciation on additions to assets or on sale - discardement of assets, is calculated pro-rata from the month of such addition or upto the month of such sale/discardment, as a case may be.

d. Research and Development Expenditure

Revenue Expenditure is charged in Profit & Loss Account and Capital Expenditure is added to the cost of Fixed Assets in the year when it is incurred.

e. Revenue Recognition/Income

Revenue Income is recognised on accrual basis except where mentioned otherwise, in particular:

i. Sales revenue is recongnised when it is earned and no significant uncertainty exists as to its realisation or collection. Sales are net of sales return and trade discounts. Rebate, claims and discounts are accounted for as and when determined. Deductions made have been reduced from the Sales where found necessary. Export sales are accounted on the basis of acceptance by the customers and on the basis of export bill of lading. Export sales are accounted as per the prevailing exchange rate on the date of transaction. Revenue from services is recongnised on rendering of services.

ii. Gross Sales include excise duty collection of Rs. 10,095.74 lacs, Service Tax, Sales Tax and Freight charged in invoices.

iii. The pipe coating income is recognised after inspection, approval by customers and after dispatch.

iv. Interest income is taken on accrual basis. Interest Income of Rs. 477.88 Lacs netted off against interest payment during the year. (Previous year interest income of Rs.769.75 lacs netted off against interest payment) wherever applicable.

v. Dividend income on investments are accounted for when the right to receive the payment is established.

vi. Expenditures are accounted for on accrual basis and provisions are made for all known liabilities.

f. Treatment of expenditure during construction period:

Expenditure in the case of new units and substantial expansion of existing units during the construction period is included in the work in progress and the same is allotted to the respective Fixed Assets on the completion of the construction.

g. Fixed Assets

i. Fixed assets are stated at cost of acquisition and installation. The cost includes freight, taxes and related incidental expenses less Modvat Credit. ii. The company has erected factory building sheds and installed plant and machinery on lease hold land. The company had incurred some developmental expenditure which was earlier in CWIP on factory buidling, plant and on lease hold land which increase the future benefits from the existing assets beyond its previously assessed standard of performance i.e. increase in capacity, modernisation & upgradation.

h. Foreign Currency Transactions

i. a. The company is exposed to Currency Fluctuations on foreign currency transactions. With a view to minimize the volatility arising from fluctuations in the currency rates, the company follows established risk management policies including the use of exchange forward contracts and other derivative instruments.

b. Foreign Currency transactions are recorded at the exchange rate prevailing on the date of such transactions. Monetary Assets and Liabilities in Foreign Currency as in the Balance Sheet. Gains and Losses arising on account of difference in foreign exchange rates on settlement/translation of monetary assets and liablities are recognized in the Profit and Loss Account.

c. In respect of forward contracts assigned to the foreign currency assets as at the Balance Sheet date, the proportionate premium / discount for the period up to the date of Balance Sheet is recognized in the Profit and Loss Account. The exchange difference measured by the exchange rate between the inception of forward contract and date of Balance Sheet is applied on foreign currency amount of the forward contract and is recognized in the Profit and Loss Account.

ii. All loans and deferred credits repayable in foreign currency and outstanding at the close of the year are expressed in Indian currency at the appropriate rate of exchange prevailing on the date of Balance Sheet.

iii. Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at the close of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year.

i. Employee Benefits

A. Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.

B. Post-employment benefits

(a) Defined contribution plans

Defined contribution plans are Provident Fund Scheme, Employee State Insurance Scheme and Government administered Pension Fund Scheme for all employees and superannuation scheme for eligible employees. The Companys contribution to defined contribution plans are recognised in the Profit and Loss Account in the Financial Year to which they relate.

The Company makes specified monthly contributions towards employee provident fund to the Regional Provident Fund Authority by the Company.

b) Defined benefit plans Defined benefit gratuity plan The Company operates a defined benefit gratuity plan for employees. The Company contributes the same to LIC, towards meeting the Gratuity obligation.

C. Other Long Term Employee Benefits

Entitlements to annual leave and sick leave are recognized when they accrue to employees. Sick leave can only be availed while annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulation of leave. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit method with actuarial valuations being carried out at each Balance Sheet date.

For the year ended March 31, 2010, provision for Employees Benefits amounting to Rs. 63.73 Lacs towards Leave Encashment has been made to SBI Life Insurance Co. Ltd., Mumbai. The actual liability as per acturial valuation amounts to Rs. 95.37 Lacs

The estimates of the future salary increases considered in Actuarial valuation take account of inflation, seniority promotion and other relevant factors.

- Including Contribution to Recognised Provident Fund Scheme (in respect of employees of Pune and Head office, Mumbai) a defined benefit scheme in the absence of actuarial valuation for Provident Fund Liability. (Refer Note 1 (i)(v) in Schedule 14)

j Derivative Instruments

I. The Company has entered into the following Derivative Instruments.

a. Forward Exchange contracts (being a derivative instrument), which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

Forward Exchange Contracts entered into by the Company as on March 31, 2010.: N I L

b. Interest Rate Swaps to hedge against fluctuations in interest rate changes :

No. of Contracts : NIL

Notional Principal : NIL

c. Currency Swaps (other than forward exchange contracts stated above) to hedge against fluctuations in changes in

exchange rate.

No. of Contracts : NIL

Notional Principal : NIL

III. Derivative Instruments (causing an unhedged Foreign Currency exposure) N I L

k. Investments

i. Investments are of long term nature and are stated at cost of acquisition, less any diminishing in the value other than temporary.

ii. The investments in Companies under the same management and its subsidiaries whose shares are unquoted are valued at cost. The Management is of the opinion that there is no diminishing value on these Investments.

l. Borrowing Cost

Interest & other borrowing costs on specific borrowings relatable to the qualifying assets are capitalised. Other interests and borrowing costs are charged to Revenue.

m. Cash Flow Statement

The Cash Flow statement is prepared by the indirect method set out in Accounting Standard - 3 on Cash Flow Statement and presents cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents presented in the Cash Flow statement consists of cash in hand and demand deposits with banks as on the Balance Sheet date.

n. Provisions

A provision is recognised when there is a present obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligations and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined based on the best estimate required to settle the obligation at the year end date. These are reviewed at each year end date and adjusted to reflect the best current estimate.

o. Segment Reporting

The Group is engaged in the business of production of steel products which in the opinion of the management is considered the only business segment in the context of Accounting Standard -17 on Segmental Reporting. Also, the Croup does not consider any significant difference as regards the risks and returns of the product with reference to export and domestic sales. Therefore, Segment information as required by Accounting Standard - 1 7 is not applicable.

p. Related Parties and Key Management Personnel Disclosure

A. Name of the Party and the relationship

T PSL Corrosion Control Services ItcT. : 100% Subsidiary Company

ii. Pipeline Systems Ltd., Mauritius : 100% Subsidiary Company

iii. PSL USA INC., Delaware, USA : 100% Subsidiary Company

iv. BHI Ltd.

v. Broken Hills International Ltd.

vi. Eurocoustic Products Ltd. Companies in which control exists directly/ indirectly vii. Punj International Pvt. Ltd. viii. Punj Investments Pvt. Ltd.

ix. Punj Corporation Private Limited

x. PSL FZE, Sharjah. : 100% Subsidiary Company of Pipeline Systems Ltd., Mauritius

xi. PSL North America LLC. : JV Company of PSL USA INC, Delware, USA, (78% holding)

Ashok Punj : Managing Director

M. M. Mathur : Director

R. K. Bahri : Director

G. S. Sauhta : Director

D. N. Sehgal : Director

S. P. Bhatia : Director

C. K. Goel : Director

G. Gehani : Director & Co. Secretary

q. Lease

Operating lease payments are recognized as expenditure in the Profit and Loss Account on a straightline basis, which is representative of the time pattern of benefits received from the use of assets taken on lease. Lease rentals in respect of operating lease are recognized as income over the lease period.

r. Management Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent liabilties on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and the differences between actual results and estimates are recognised in the periods in which the results are known / materialize.

s. Accounting for Taxes on Income

Income Taxes are accounted for in accordance with Accounting Standard 22 on Accounting for taxes on income. Income taxes comprise both current and deferred tax.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws. The company offsets advance payments and provisions for current tax and disclose the net amount it intends to settle and where it has a legally enforceable right to set off the recognised amount.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax assest or a deferred tax liability. Deferred tax assests and liabilities are recognized for future tax consequences attributable to timing differences.

They are measured using the substantively enacted tax rates and tax regulations.

The carrying amount of deferred tax assets at each Balance Sheet date is reduced to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which the deferred tax assests can be realized.

t. Sundry Debtors/Loans & Advances

Sundry Debtors, Creditors and other advances are subject to confirmation. The effect of the same, if any, which is not likely to be material, will be adjusted at the time of confirmation. Sundry Creditors for purchases includes Rs.10199.11 Lacs being buyers credit availed by the Company for the purchase of Raw Materials/ Capital Goods.

u. Impairment of Assets:

In the opinion of the companys Management , there is no impairment to the assets to which Accounting Standard-28 "Impairment of Assets" applied requiring any revenue recognition.

v. Contingent liabilities

Contingent liabilities as defined in Accounting Standard 29 are disclosed in the notes to accounts. Provisions are made if it became probable that an outflow of future economic benefits will be required for an item previously dealt with as a contingent liability.



 
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